Economic Performance of Recent US Presidents - Essay Example

?Insert Insert of the Insert of the Insert assignment is due Economic performance of the four most recent US Presidents There have been raging debates about the real economic performance of presidents and how their political and economic policies affected both the micro and macro economic aspects of the US and the world. As the head of state and the chief executive of the United States of America, the president may influence the economy in a positive or negative way. His or her policy may favor factors that promote economic growth or limit it. The main economic parameters that indicate whether a president performed well or poorly economically are the real Gross Domestic Product, civilian unemployment rate, consumer price index for major expenditure classes and, changes in consumer index for commodities and services. Presidents’ economic performance based on the real Gross Domestic Products The two presidential terms, the first term of president Barrack Obama and the last term of President George W. Bush were characterized by the worst economic performance since World War II. The real Gross Domestic Product (GDP) grew by only 4% during the second term of President George W. Bush’s tenure, which was the weakest since World War II. During the first term of Obama’s tenure, the real GDP grew by 5.9%, the second weakest since World War II. According to NBER (National Bureau of economic research), the most recent recession began in 2007 and ended in 2009. NBER states that economic recession starts when growth is at the peak, and then the nation begins to experience slow economic activity. A recession comes to an end and economic expansion begins after the economic activities hit the economic trough and start to grow again. It can be concluded that the most recent economic growth was lowest during the last term of George W. Bush and started to peak during Barrack Obama’s first term. It can be noted further that George W. Bush and Barrack Obama’s apparent weak growth in the Gross Domestic Product can be attributed to the great recession that was experienced during their terms (Tanzi 52). One of the easiest ways to measure the macroeconomic effects of Clinton’s era is to analyze the GDP. Clinton inherited a deficit of 4.7% from George H. W. Bush, and through superb economic policies, he managed to transform it into a surplus of 2.4% of the GDP in 2000. In addition, federal spending dropped from 22% of GDP in 1992 to 18.4% in 2000. It can be concluded that during Clinton’s era, the economy experienced the highest growth of GDP at 14% due to sound economic policies, low interest rates, and reduced spending that resulted in a relatively low deficient rate. However, some critics state that Bill Clinton’s economic policies encouraged subprime lending, housing bubble, and economic boom, which were instrumental in starting the great recession (Tanzi 58). George H. W. Bush can be remembered for spurring the economy that buoyed Clinton’s economic prosperity. He inherited from Reagan an economy that had started to enter the recession phase after experiencing a considerable economic prosperity. During his era, the GDP grew by 8.8%, which was a bit higher than those posted by Barrack Obama and George W. Bush. Although his presidency was marked by excessive spending on wars, such as the Gulf War, he managed to contain inflation and provided a good economic pathway for the prosperity of the economy during Bill Clinton’s era (Grabowski, Self, and Shields 71). Presidents’ economic performance based on civilian unemployment rate The United States of America has experienced eleven recessions since 1948. The federal and state governments have applied several measures to combat recession and minimize civilian unemployment through tax cuts and stimulus spending. In the early 1980s, the economy endured a recession, and the rate of unemployment was at double digits. The main reason was that the federal government was trying to minimize the inflation that was affecting the economic growth. The government was more concerned with unemployment, but its actions and policies were mainly aimed at combating inflation. As such, the unemployment rate fell from 10.8% to 5.3% when George H.W. Bush was elected president. In 1990, the country faced another recession. The Congress developed strategies to reduce unemployment rates, but George H.W. Bush vetoed them. The country was under economic malaise, and the unemployment rates began to rise. When George H. W. Bush was leaving office, wages were stagnant; the American economy was barely creating jobs while the rate of unemployment was 7.5% (Tanzi 57). In 1992, when bill Clinton took office, the unemployment rate was 7.5 percent. His bold and concise three-part economic strategy focused on three main objectives. These are opening of foreign markets, fiscal discipline, and investing in healthcare, education, and science and technology. In 1999, the unemployment rate was 4.2%, which was the lowest since 1969 whereas in December 1999, the unemployment rate was 4.1%. The unemployment rate for women was 4.1%, the lowest since 1953 while the major minority groups, the Hispanics and the African Americans, displayed record low unemployment rates in 1999. The unemployment rate for the Hispanics fell from 11.5% in 1992 to 6.4% in 1999 while that of African America fell from 14.2% to 8.0% during the same time (Grabowski, Self, and Shields 67). During Clinton’s governing, the economy created more jobs than any other administration since World War II. Under the watch of President Bill Clinton, the economy created an average of 245,000 jobs per month. This was higher compared to 52,000 jobs created under president George H. W. Bush, 110,000 during president George W Bush and 129,000 jobs in Obama’s tenure. In addition, the average hourly earning was 3.7%, an amount that was higher than the inflation rate, which clearly indicates that employment boom was experienced during Clinton’s era (Tanzi 98). During George W. Bush’s era, the rate of seasonally adjusted unemployment increased from 4.3% in the winter of 2001, peaked at more than 6 % in the summer of 2003, and reached a 4.4 % trough in the autumn of 2007. As a consequence of the meltdown of the economy, the seasonally adjusted unemployment rate rose further to more than 6 % in August 2008, recording the highest rate of 7.2% in the winter of 2008. When the great recession began to affect the US economy, more than 3.5 million people were unemployed (Grabowski, Self, and Shields 107). President Barrack Obama inherited the worst economic recession from President George W. Bush. The rate of unemployment rose to 10% during his first year in office and had been dropping gradually to 7.8% in December 2012. The decline can be attributed to the fact that some Americans have returned to work, but also a large percentage of workers have dropped from the American labor force. Although Obama’s economic policy such as economic stimulus and loosening of monetary and economic policies played a key role in combating the great recession, unemployment has remained Obama’s major economic problem. Three months before his re-election, the unemployment rate stagnated at 8.3%. Thus, 40 % of the unemployed are long-term unemployed. The 13 million unemployed people are joined by 10 million people who have given up looking for jobs or are underemployed (Grabowski, Self, and Shields 47). Consumer price index Consumer price index (CPI) is used to measure the level of price of consumer goods and services bought by households over time. The price of a market basket of consumer goods and services purchased by urban consumer is the main basis of CPI (Tanzi 13). During George H.W. Bush’s presidency, the CPI was estimated at 11%. This is because the economy faced a short recession, and due to heavy spending on the military during the Gulf War, the economy had started to weaken, increasing unemployment rates and eventually affecting consumer purchasing power (Tanzi 32). Clinton’s economic policy that played a key role in minimizing inflation was instrumental in reducing consumer price index (CPI). In the 1990s, during Bill Clinton’s presidency, the CPI stabilized at a fairly low rate that never went above 5%. Other factors that may have contributed to a fairly low CPI include high circulation of money in the economy due to low unemployment rates, increased business activities, and minimal levels of poverty (Grabowski, Self, and Shields 77). The CPI during George H.W. Bush’s era averaged 72% because recession had started to affect the economy, thus affecting the buying power of people. Obama’s recession-hit economy has been characterized by high cost of living among people. Furthermore, increased unemployment rates and high poverty levels have affected the consumer purchasing powers. Although a raft of measures have been undertaken to combat the recession and the biting inflation, it is evident that the consumer price indexes for commodity and services and that for major expenditure classes have been rising. During Obama’s era, the widely watched CPI Increased by 0.5% from 126.8 to 127%, with the highest CPI of 126.9% being experienced in July 2008. Since 2008, there has been no significant improvement in consumer price index (Tanzi 52). In my opinion, the US economy prospered during Bill Clinton’s presidency. The consumer price index was low, and the rate of unemployment was the lowest since World War II while the growth of the real Gross Domestic Product was the highest. This may be attributed to sound economic policies that he adopted during his tenure as president. The worst economic condition was presided over by President Obama. The reason is that he inherited an economy that was experiencing the worst recession, and so it took a lot of efforts, money, and time to control the recession. The recession had profound impacts on businesses and the ordinary people, thus increasing the levels of unemployment, collapse of the businesses, high poverty levels and a meltdown of the national economy. Works Cited Tanzi, Vito. Government Versus Markets: The Changing Economic Role of the State. New York, NY: Cambridge University Press, 2011. Print. Grabowski, Richard, Sharmistha Self, and Michael P. Shields. Economic Development: A Regional, Institutional, and Historical Approach. Armonk, N.Y: M.E. Sharpe, 2007. Read More